Highmark disputes UPMC take on finances

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Highmark Inc. officials say they expect to submit additional information requested by the Pennsylvania Insurance Department within 10 days and the process should not delay the department's review of Highmark's proposed affiliation with the West Penn Allegheny Health System.

In a filing with the insurance department Monday, Highmark also accuses UPMC of having "launched a campaign to attempt to prevent the Highmark-WPAHS affiliation from being consummated, with the hope that WPAHS then fails."

Earlier this month, UPMC began circulating to elected officials and others an analysis that predicted that the West Penn Allegheny Health System could only see enough patients to survive financially if Highmark ended its relationship with UPMC when their contract expires in 2015 and then steered patients to WPAHS.

"Nothing could be further from the truth," Highmark states in a nine-page "position paper" filed with the insurance department on Monday.

West Penn Allegheny can be turned around financially if Highmark and UPMC extend or renew their contract, the filing stated, "albeit at a slower pace" than the estimated two years it would take WPAHS to return to profitability if the UPMC contract expires.

Ultimately, Highmark expects more consumers will choose its network, which it says will provide high quality care at a lower cost than UPMC. "Without competition ... UPMC will be able to demand whatever rates it wishes from insurers and the public," the filing states.

The UPMC analysis, at least indirectly, apparently prompted Deputy Insurance Commissioner Stephen J. Johnson on Friday to ask Highmark for additional information regarding the insurer's financial projections for its proposed affiliation with WPAHS and plans to build its own integrated health care delivery system to compete with UPMC.

"No decision [regarding the proposed Highmark-WPAHS affiliation] will be made" until the information is received and reviewed, Mr. Johnson wrote.

In a telephone briefing Monday, Highmark chief financial officer Nan Deturk, market president Deb Rice and chief legal counsel Tom VanKirk said they have been sharing financial projection information with the insurance department all along. The latest request asks for projections on the impact on both Highmark and the proposed parent entity if the UPMC contract is extended.

"We do not believe that this should cause any delay in the insurance department review and the insurance department should be able to wrap up their process by April 30," Ms. Deturk said.

While UPMC says it does not oppose Highmark's plans for its own integrated health care delivery system, its analysis concludes that the project will cost $2.4 billion to $4 billion.

Highmark disputed that figure and in Monday's filing reiterated its earlier projection that its network will cost about $1 billion, including the cost of proposed affiliations with Jefferson Regional Medical Center in Jefferson Hills and St. Vincent Health System in Erie.

"With over $6 billion in liquid assets and total assets of over $11 billion, the Highmark system clearly has the financial capacity to invest $1 billion" in its own delivery network, it states in the filing. "Highmark is a financially strong viable organization that will remain strong after its affiliation with WPAHS," the insurer said.

state - businessnews - health

Steve Twedt: stwedt@post-gazette.com or 412-263-1963.


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